Telangana High Court
Dr. K. Sushmitha vs The State Of Telangana on 27 December, 2024
Author: Nagesh Bheemapaka
Bench: Nagesh Bheemapaka
HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA WRIT PETITIONS No. 22368, 22926, 23098, 23275 AND 34487 OF 2023 COMMON ORDER:
Challenge in all these Writ Petitions is to G.O.Ms.No. 107, dated 28.07.2023 issued by the 1st respondent State of Telangana in its Health, Medical and Family Welfare Department. By the said G.O., annual tuition fee for Private Medical Un-aided Minority and Non-minority Professional institutions was hiked for the block period 2023-26 in the range of 118% to 554% which results in profiteering or collection of capitation fee by the colleges and gross commercialisation of Post-Graduate Medical/Dental Courses in the State, contends petitioners who appeared for post-graduate entrance exam held on 05.03.2023 by the National Eligibility and Entrance Test for the academic year 2023-24 and results thereof were declared on 14.03.2023.
2. Since the issue covered in all these Writ Petitions is one and the same, they are being heard together and disposed of by this common order.
3. The grievance of petitioners is that pursuant to the judgment of the Hon'ble Supreme Court in Islamic Academic 2 of Education v. State of Karnataka 1, the erstwhile Government of Andhra Pradesh issued G.O.Ms.No. 90, dated 22.12.2003 constituting a Committee headed by a retired Judge of the High Court of Andhra Pradesh for fixation of fee for the students admitted into un-aided private professional educational institutions (minority and non-minority) which, though, was appointed initially for one year, subsequently, was to continue till an appropriate legislation was passed by the Parliament.
It is stated, pursuant to the judgment of the Hon'ble Supreme Court in P.A. Inamdar v. State of Maharashtra 2, the erstwhile Government of Andhra Pradesh issued G.O.Ms.No. 6, dated 08.01.2007 i.e. Andhra Pradesh Admission and Fee Regulatory Committee for Professional Courses offered in Private Un-aided Professional Institutions Rules, 2006, in terms of Rule 4 of which, the 3rd respondent - Telangana Admission and Fee Regulatory Committee (TAFRC) is the body to call for, decide and approve or alter and communicate the fee structure as determined by it under the Rules to the Government for 1 2003(6) SCC 690 2 (2005) 6 SCC 537 3 notification. After reorganization of erstwhile State, vide G.O.Rt.No. 160, dated 22.07.2015, the 3rd respondent was constituted to regulate admissions and fix the fee structure for private un-aided professional colleges in the State of Telangana. Thereafter, pursuant to the recommendations of the 3rd respondent for the block period of three years i.e. from 2010-11 to 2012-13, the 1 respondent issued G.O.Ms.No. 116, dated 14.05.2010 fixing fee structure Subsequently, the 1st respondent issued G.O.Ms.No. 29, dated 02.05.2016 for the academic year 2016- 17 fixing fee structure with percentage of fee hike at 10 only Thereafter, the 1st respondent issued G.O.Ms.Nos.40, 41, 42 and 43, dated 09.05.2017 framing Rules for the academic year 2017-18, fixing fee at exorbitant and unreasonable rates. Challenging the same, W.P(PIL) Nos. 130 and 133 of 2017 were filed wherein this Court vide order dated 19.01.2022, while quashing the said G.Os., directed that all students shall pay fee fixed by the TAFRC notified vide G.O.Ms.No. 29, dated 02.05.2016 for the block period 2016-19; further directing the colleges to return all original certificates forthwith to students; refund the excess fee, if any collected within 30 days thereof. 4
It is also stated, for the block period 2020-23, the 1st respondent issued G.O.Ms.No. 20, dated 14.04.2020 which was resulting in profiteering or collection of capitation fee, therefore, questioning the same, Writ Petition No. 6799 of 2020 and batch of cases were filed, wherein, by order dated 26.05.2020, this Court, inter alia, directed petitioners therein and others belonging to Category-A to deposit 50% of the amount mentioned in the G.O.; those falling in Category-B to deposit 60% and the said Writ Petition is still pending.
While the matter stood thus, the 1st respondent issued the impugned G.O. for the period 2023-26, the fee fixed under the said G.O, is identical to the quantum of fee fixed under G.O.Ms.No. 20, dated 14.04.2020. Petitioners have given the comparative table from G.O.Ms.No. 29 to G.O.Ms.No. 20 to G.O.Ms.No. 107.
4. At the time of admitting Writ Petitions, this Court vide order dated 17.08.2023, taking into consideration the direction issued in Writ Petition No. 6799 of 2020 where earlier G.O.Ms.No. 20, dated 14.04.2000, was challenged, directed in these Writ Petitions also that for candidates belonging to category-A, fee should be collected at 60% of the amount 5 payable as per the impugned G.O., for candidates belonging to Category-B, @70%; candidates, who fall within the ambit of either Category-A or B, shall, at the time of payment, furnish a personal bond undertaking to pay the remaining amount on disposal of the Writ Petition, in case, the same is required to be paid; and in case, any of the candidates had already deposited fee entirely, they cannot claim for refund of amount immediately, however, request for refund shall be entertained on disposal of Writ Petition in case they are entitled for such refund.
5. In the counter-affidavit filed on behalf of Respondents 10 and 11, it is stressed that fee fixation must align with the Telangana Admission and Fee Regulatory Committee (TAFRC) Rules, 2006, specifically Rule 4(iv), which lists factors such as location, infrastructure, administrative costs, and provisions for waivers for economically weaker sections. The TAFRC, constituted under the TAFRC Rules, evaluates fee proposals from institutions to ensure compliance with these principles. Its composition includes a retired High Court judge and domain experts in finance and education Institutions submit detailed financial data for evaluation, 6 including past expenditures, anticipated costs, and the need for surplus funds. TAFRC reviews these proposals to prevent profiteering or capitation fees and makes recommendations to the state government, which then issues fee notifications.
The affidavit outlines the historical context leading to issuance of impugned G.O. which fixed fees for the block period 2023-26. It traces the fee fixation process from the erstwhile combined Andhra Pradesh to the present, noting that fees remained stagnant from 2010 to 2016 due to delays in TAFRC's constitution. A temporary 10% hike was applied in 2016, not based on actual financial data. Subsequently, TAFRC undertook detailed evaluations for subsequent block periods, including the current one. This fees was based on outdated expenditures from 2009-10 and were not reflective of current costs or inflation. Petitioners' assertion that 5-10% annual hike is reasonable is dismissed as contrary to Rule 4(iv) of the TAFRC Rules, which mandates fee fixation based on actual financial data and future requirements While acknowledging the economic challenges posed by the pandemic, Respondents argue that fee fixation must consider the institutions' financial realities, including inflation and need for surplus funds. 7
As regards scope of judicial review, it is stated, Courts are generally reluctant to interfere with decisions made by expert bodies like TAFRC unless there is evidence of arbitrariness, perversity, or violation of legal provisions. The petitioners have failed to demonstrate such grounds, as their allegations lack supporting material or cogent evidence It Is stated that fee fixation for each block period is determined independently based on the expenditure incurred by the institution during the preceding years, adjusted for inflation and reasonable surplus for development, as mandated by Rule 4(iv) of the TAFRC Rules and upheld by the Hon'ble Supreme Court in its judgments. The fee structure for the previous block period has no bearing on the current determination. It is argued that fee fixed under GO. Ms. No. 29, dated 02.05.2016, was itself flawed and illegal, as it did not adhere to the parameters prescribed by the Hon'ble Supreme Court and Rule 4(iv) of the TAFRC Rules. It is stated that the 1st respondent is bound by the recommendations of the 3rd respondent under Rule 4(v) of the TAFRC Rules and judicial pronouncements. It has no independent authority to alter the recommendations. Therefore, the contention based on the pandemic's economic impact is 8 untenable. Respondents emphasize that paying stipends to postgraduate students is mandated by law, as acknowledged by petitioners. G.O.Ms. No. 98 dated 01.09.2018 fixes the stipend between Rs. 44,075/- and Rs. 48,973/- per month for postgraduate students. The Petitioners' argument that stipends compensate for services rendered by students is dismissed as specious. The services form part of their education and training, mandatory for awarding degrees and professional preparation. It is asserted that stipend often exceeds the fee collected from Convener Quota students in clinical non-degree courses and amounts to 80-100% of fees in degree courses. This creates a financial imbalance for institutions, making the Petitioners' stance untenable.
The issuance of G.O. Ms. No. 20 dated 14.04.2020 is a matter of record. This G.O, fixing the fee for the block period 2020-2023, was challenged in W.P. No. 6799 of 2020 and related cases, which are pending adjudication. The Respondent and other institutions have filed counters and vacate applications against the order dated 14.04.2020. It is also stated that filing of writ petition is premature, as petitioners approached the Court immediately after submitting 9 representation, without awaiting a response from the authorities Respondents emphasize the need to balance student interests with institutional sustainability. Subsidized fees for Convenor Quota students address affordability concerns for middle-class and meritorious students. The Petitioners' claims lack substantiation. They therefore, prays for vacating the interim order dated 17.08.2023 and dismissal of Writ Petition.
6. Respondents 7 and 8 also filed the counter-affidavit on similar lines as above, hence, need not be reproduced.
7. Learned counsel for petitioners Sri Sama Sandeep Reddy submits that impugned GO is identical to G.O.Ms. No. 20, dated 14-04-2020 and the quantum of fee fixed is exorbitantly high in comparison with fee fixed through G.O.Ms. No. 29, dated 02-05-2016. According to him, 5 to 10% hike in fee per annum could be reasonable and the abnormal hike ranging from 118% to 554% is arbitrary, illegal and there is no cogent basis for arriving such an exorbitant fee recommended by the 3rd respondent and the same is liable to be set aside. Learned counsel, relying on the judgment of Division Bench of this Court in Consortium of Engineering Management 10 Association (CECMA) v. Government of Andhra Pradesh 3, contends that recommendations made by the 3rd respondent revising the fee structure, has not been placed in public domain. Even the representation dated 07.08.2023 submitted by petitioners to the 3rd respondent to provide them a copy of its recommendations and other details was also not considered. Further, it is argued that fee under CAT-C across all courses and all institutions is broadly mentioned as 'up to there times of B-CAT'; this broad fixation is arbitrary and against the judgment of Hon'ble Supreme Court in Islamic Academic of Education's case (supra). According to learned counsel, the Committee has to approve or propose fee structure on the basis of the relevant documents and books of accounts of each institute and it has to arrive at a finite fee and not an abstract fee such as three times B-CAT fee. If the impugned G.O. is allowed to stand, it would hamper the hopes of students who hail from middle class and lower middle-class aspiring to pursue Post Graduate medical and dental courses.
8. Learned Government Pleader for Medical, Health and Family Welfare submits that the 3rd respondent furnished 3 2013(3) ALD 609 11 its recommendations dated 14-07-2023 fixing fee structure for PG dental medical and dental courses in the State of Telangana for the block period 2023-26 in private unaided medical and dental colleges, based on which, the impugned G.O. was issued, hence, no illegality or arbitrariness can be attributed to the said G.O.
9. Learned Standing counsel for the 3rd respondent, Sri Katika Ravinder Reddy denying the allegations of petitioners, inter alia, submits that the Committee after scrutinizing the accounts and audited financial statements/income and expenditure statements of each institution, fixed fee structure and recommended to the government for issuance of necessary orders. In view of increase of expenditure towards salaries of teaching and non-teaching faculty and other staff and while fixing the fee, the audited figures of the institution would be taken into account and inflation @10% and furtherance of 15% have been taken into account ie a total of 25% is added to the expenditure of the institution and also considered stipends payable to students by the institutions. It is further argued that decision of the 3rd respondent quasi-judicial authority is not amenable to judicial review and fee fixation is a matter to be 12 determined by the 3rd respondent consisting of domain experts (which, inter alia include, finance professionals and academic experts of the concerned professional course), scrutinizing the exercise done by them to arrive at the fee structure ordinarily falls out of the purview of judicial review. Further, fee fixed does not amount to profiteering or capitation fee and judicial review would be limited to evaluate only if the decision-making process while performing this function is in line with the settled Constitutional principles.
10. Sri R. Panduranga Reddy, learned counsel for Respondents 7 and 8 submits that right of management to establish and administer educational institutions, including right to fix fees, is protected under Article 19(1)(g) of the Constitution of India, as upheld by the Hon'ble Supreme Court in TMA Pai Foundation v. State of Karnataka 4.. Subsequent judgments in Islamic Academy of Education vs. State of Karnataka (supra) and P.A. Inamdar vs. State of Maharashtra (supra) mandate that fee proposals submitted by institutions be scrutinized by the Admission and Fee Regulatory Committee (AFRC) 4 (2002) 8 SCC 481 13
11. Heard Sri K. Siddhartha Rao, learned counsel for the 6th respondent, Ms. G. Lakshmi, learned counsel for Respondent No 19, Sri Peri Prabhakar, learned counsel for Respondent No. 12, Sri A. Venkatesh, learned Senior Counsel on behalf of Sri Srinivas Rao Pachwa, learned counsel, Sri Vikram Poosarla, learned Senior Counsel on behalf of Sri Mallipeddi Abhinay Reddy, learned counsel for Respondents 10, 11 and 24.
12. Having heard learned counsel on either side and having perused the material on record, at the outset, this Court Wishes to discuss the legal position laid down by the Hon'ble Supreme Court:
In T.M.A.Pai Foundation v. State Of Karnataka, it has been held as under:
" 38. The scheme in Unni Krishnan's case has the effect of nationalizing education in respect of important features, viz., the right of a private unaided institution to give admission and to fix the fee. By framing this scheme, which has led to the State Governments legislating in conformity with the scheme the private institutions are undistinguishable from the government institutions, curtailing all the essential features of the right of administration of a private unaided educational institution can neither be called fair or reasonable. Even in the decision in Unni Krishnan's case, it has been observed by Jeevan Reddy, J., at page 749, para 194, as follows:14
"The hard reality that emerges is that private educational institutions are a necessity in the present day contest. It is not possible to do without them because the Governments are in no position to meet the demand particularly in the sector of medical and technical education which call for substantial outlays. While education in one of the most important functions of the Indian State it has no monopoly therein. Privute educational institutions including minority educational institutions too have a role to play".
39. That private educational instructions are a necessity becomes evident from the fact that the number of government- maintained professional colleges has more or less remained stationary, while more private institutions have been established. For example, in the State of Karnataka there are 19 medical colleges out of which there are only 4 government- maintained medical colleges. Similarly, out of 14 Dental Colleges in Karnataka, only one has been established by the government, while in the same State, out of 51 Engineering Colleges, only 12 have been established by the government. The aforesaid figures clearly indicate the important role played by private unaided educational institutions, both minority and non-minority, which cater to the needs of students seeking professional education.
53. With regard to the core components of the rights under Article 19 and 26(a), it must be held that while the state has the right to prescribe qualifications necessary for admission, private unaided colleges have the right to admit students of their choice, subject to an objective and rational procedure of selection and the compliance of conditions, if any, requiring admission of a small percentage of students belonging to weaker sections of the society by granting them freeships or scholarships, if not granted by the Government. Furthermore, in setting up a reasonable fee structure, the element of profiteering is not as yet accepted in Indian conditions. The fee structure must take into consideration the need to generate funds to be utilized for the betterment and growth of the educational institution, the betterment of education in that institution and to provide facilities necessary for the benefit of the students. In any event, a private institution will have the right to constitute its own governing body, for which qualifications may 15 be prescribed by the state or the concerned university. It will, however, be objectionable if the state retains the power to nominate specific individuals on governing bodies. Nomination by the state, which could be on a political basis, will be an inhibiting factor for private enterprise to embark upon the occupation of establishing and administering educational institutions. For the same reasons, nomination of teachers either directly by the department or through a service commission will be an unreasonable inroad and an unreasonable restrictions on the attorney of the private unaided educational institution.
54. The right to establish an educational institution can be regulated, but such regulatory measures must, in general, be to ensure the maintenance of proper academic standards, atmosphere and infrastructure (including qualified staff) and the prevention of mal- administration by those in charge of management. The fixing of a rigid fee structure, dictating the formation and composition of a government body, compulsory nomination of teachers and staff for appointment or nominating students for admissions would be unacceptable restrictions.
69. In such professional unaided institutions, the Management will have the right to select teachers as per the qualifications and eligibility conditions laid down by the State/University subject to adoption of a rational procedure of selection.
A rational fee structure should be adopted by the Management, which would not be entitled to charge a capitation fee. Appropriate machinery can be devised by the state or university to ensure that no capitation fee is charged and that there is no profiteering, though a reasonable surplus for the furtherance of education is permissible. Conditions granting recognition or affiliation can broadly cover academic and educational matters including the welfare of students and teachers."
In Islamic Academy Of Education v State Of 16 Karnataka 5, it has been held thus:
" Both sides relied upon various passages from the majority judgment in support of the respective submissions. These passages are reproduced hereinafter. In view of the rival submissions the following questions arise for consideration:
Whether the educational institutions are entitled to fix their own fee structure,
7. So far as the first question is concerned, in our view the majority judgment is very clear. There can be no fixing of a rigid fee structure by the government. Each institute must have the freedom to fix its own fee structure taking into consideration the need to generate funds to run the institution and to provide facilities necessary for the benefit of the students. They must also be able to generate surplus which must be used for the betterment and growth of that educational institution. In paragraph 56 of the judgment it has been categorically laid down that the decision on the fees to be charged must necessarily be left to the private educational institutions that do not seek and which are not dependent upon any funds from the Government. Each institute will be entitled to have its own fee structure. The fee structure for each institute must be fixed keeping in mind the infrastructure and facilities available, the investments made, salaries paid to the teachers and staff, future plans for expansion and/or betterment of the institution etc. Of course there can be no profiteering and capitation fees cannot be charged. It thus needs to be emphasized that as per the majority judgment imparting of education is essentially charitable in nature.
Thus the surplus/profit that can be generated must be only for the benefit/use of that educational institution. Profits/surplus cannot be diverted for any other use or purpose and cannot be used for personal gain or for any other business or enterprise. As, at present, there are statutes/regulations which govern the fixation of fees and as this Court has not yet considered the validity of those statutes/regulations, we 5 2003(6) SCC 697 17 direct that in order to give effect to the judgment in TMA PAI's case the respective State Governments concerned authority shall set up, in each State, a committee headed by a retired High Court judge who shall be nominated by the Chief Justice of that State The other member, who shall be nominated by the Judge, should be a Chartered Accountant of repute. A representative of the Medical Council of India (in short 'MCI) or the All India Council for Technical Education (in short 'AICTE), depending on the type of institution, shall also be a member The Secretary of the State Government in charge of Medical Education or Technical Education, as the case may be, shall be a member and Secretary of the Committee. The Committee should be free to nominate/co-opt another independent person of repute, so that total number of members of the Committee shall not exceed 5. Each educational Institute must place before this Committee, well in advance of the academic year, its proposed fee structure. Along with the proposed fee structure all relevant documents and books of accounts must also be produced before the committee for their scrutiny. The Committee shall then decide whether the fees proposed by that institute are justified and are not profiteering or charging capitation fee.. The Committee will be at liberty to approve the fee structure or to propose some other fee which can be charged by the institute. The fee fixed by the committee shall be binding for a period of three years, at the end of which period the institute would be at liberty to apply for revision. Once fees are fixed by the Committee, the institute cannot charge either directly or indirectly any other amount over and above the amount fixed as fees. If any other amount is charged, under any other head or guise eg. Donations the same would amount to charging of capitation fee. The Governments/appropriate authorities should consider framing appropriate regulations, if not already framed, where under if it is found that an institution is charging capitation fees or profiteering that institution can be appropriately penalised and alsó face the prospect of losing its recognition/affiliation 18
8. It must be mentioned that during arguments it was pointed out to us that some educational institutions are collecting, in advance, the fees for the entire course ie for all the years. It was submitted that this was done because the institute was not sure whether the student would leave the institute midstream. It was submitted that if the student left the course in midstream then for the remaining years the seat would lie vacant and the institute would suffer In our view an educational institution can only charge prescribed fees for one semester/year. If an institution feels that any particular student may leave in midstream then, at the highest, it may require that student to give a bond/bank guarantee that the balance fees for the whole course would be received by the institute even if the student left in midstream. If any educational institution has collected fees in advance, only the fees of that semester/year can be used by the institution. The balance fees must be kept invested in fixed deposits in a nationalised bank. As and when fees fall due for a semester/year only the fees falling due for that semester/year can be withdrawn by the institution. The rest must continue to remain deposited till such time that they fall due. At the end of the course the interest earned on these deposits must be paid to the student from whom the fees were collected in advance".
In P.A. Inamdar v. State of Maharashtra 6, it is observed as under:
" Q. 3 Fee, regulation of 139:
To set up a reasonable fee structure is also a component of "the right to establish and administer an institution" within the meaning of Article 30(1) of the Constitution, as per the law declared in Pai Foundation. Every institution is free to devise its own fee structure subject to the limitation that there can be no profiteering and no capitation fee can be 6 2005(6) SCC 537 19 charged directly or indirectly, or in any form (Paras 56 to 58 and 161 [Answer to Q.50] of Pai Foundation are relevant in this regard). Capitation Fees
140. Capitation fee cannot be permitted to be charged and no seat can be permitted to be appropriated by payment of capitation fee. Profession' has to be distinguished from business' or a mere occupation' While in business, and to a certain extent in occupation, there is a profit motive, profession is primarily a service to society wherein earning is secondary or incidental. A student who gets a professional degree by payment of capitation fee, once qualified as a professional, is likely to aim more at earning rather than serving and that becomes a bane to the society. The charging of capitation fee by unaided minority and non-minority institutions for professional courses is just not permissible Similarly, profiteering is also not permissible. Despite the legal position, this Court cannot shut its eyes to the hard realities of commercialization of education and evil practices being adopted by many institutions to earn large amounts for their private or selfish ends. If capitation fee and profiteering is to be checked, the method of admission has to be regulated so that the admissions are based on merit and transparency and the students are not exploited. It is permissible to regulate admission and fee structure for achieving the purpose just stated
141. Our answer to Question-3 is that every institution is free to devise its own fee structure but the same can be regulated in the interest of preventing profiteering. No capitation fee can be charged Q.4. Committees formed pursuant to Islamic Academy
142. Most vehement attack was laid by all the learned counsel appearing for the petitioner-applicants on that part of Islamic Academy which has directed the constitution of two committees dealing with admissions and fee structure. Attention of the Court was invited to paras 35,37, 38 45 and 161 (answer to question 9) of Pai Foundation wherein similar scheme framed in Unni Krishnan was specifically struck down. Vide para 45, Chief Justice Kirpal has clearly ruled that the 20 decision in Unni Krishnan insofar as it framed the scheme relating to the grant of admission and the fixing of the fee, was not correct and to that extent the said decision and the consequent directions given to UGC, AICTE, MCI, the Central and the State Governments etc are overruled. Vide para 161. Pai Foundation upheld Unni Krishnan to the extent to which it holds the right to primary education as a fundamental right, but the scheme was overruled However, the principle that there should not be capitation fee or profiteering was upheld. Leverage was allowed to educational institutions to generate reasonable surplus to meet cost of expansion and augmentation of facilities which would not amount to profiteering. It was submitted that lalamic Academy has once again restored such Committees which were done away with by Pai Foundation.
143. The learned senior counsel appearing for different private professional institutions, who have questioned the scheme of permanent Committees set up in the judgment of Islamic Academy, very fairly do not dispute that even unaided minority institutions can be subjected to regulatory measures with a view to curb commercialisation of education, profiteering in it and exploitation of studenta. Policing is permissible but not nationalization or total take over, submitted Shri Harish Salve, the learned senior counsel. Regulatory measures to ensure fairness and transparency in admission procedures to be based on merit have not been opposed as objectionable though a mechanism other than formation of Committees in terms of Islamic Academy was insisted on and pressed for Similarly, it was urged that regulatory measures, to the extent permissible, may form part of conditions of recognition and affiliation by the university concerned and/or MCI and AICTE for maintaining standards of excellence in professional education. Such measures have also not been questioned as violative of the educational rights of either minorities or non-minorities.
144. The two committees for monitoring admission procedure and determining fee structure in the judgment of Islamic Academy, are in our view, permissive as regulatory measures aimed at 21 protecting the interest of the student community as a whole as also the minorities themselves, in maintaining required standards of professional education on non- exploitative terms in their institutions. Legal provisions made by the State Legislatures or the scheme evolved by the Court for monitoring admission procedure and fee fixation do not violate the right of minorities under Article 30(1) or the right of minorities and non-minorities under Article 19(1)(g). They are reasonable restrictions in the interest of minority institutions permissible under Article 30(1) and in the interest of general public under Article 19(6) of the Constitution."
In Modern School v Union Of India 7, the Hon'ble Supreme Court decided that " Indisputably, the standard of education, the curricular and co-curricular activities available to the students and various other factors are matters which are relevant for determining of the fee structure. The courts of law having no expertise in the manner and/or having regard to its own limitations keeping in view the principles of judicial review always refrain from laying down precise formulae in such matters. Furthermore, while undertaking such exercises the respective cases of each institution, their plans and programmes for the future expansion and several other factors are required to be taken into consideration. The Constitution Bench in Islamic Academy of Education (supra) which as noticed hereinbefore subject to making of an appropriate legislation directed setting up of two committees, one of which would be for determining fee structure. This Court both in T.M.A. Pai Foundation (supra) and Islamic Academy of Education (supra) had upheld the rights of the minorities and unaided private institutions to generate a reasonable surplus for future development of education".
7 2004(5) SCC 583 22 In Vasavi Engineering College Parents'
Association v. State of Telangana 8, it is held as under:
" 14. The detailed and elaborate nature of the information sought by the TAFRC from an educational institution regarding the proposed fee structure submitted to it under the prescribed guidelines has already been noticed hereinabove. The TAFRC has also interacted with the representative of the respondent institutions and sought clarifications before the final determination by it. The proposition that the TAFRC is precluded from acting like a chartered accountant inhibiting scrutiny by it for justification of a proposal submitted to it by an institution is too wide a proposition fraught with possibilities which may inhibit the statutory functions of the TAFRC itself making it a toothless tiger In other words, the examination of the proposal will have to be done by the TAFRC in a manner commensurate and appropriate to an educational institution and not by rigid adherence to the abstract principles of chartered accountancy in general, and which may call for some flexibility.
15. In our considered opinion, the crux of the controversy is the jurisdiction and the extent to which the court can examine the determination of the fee structure by the TAFRC and approved by the State government, in exercise of the powers of judicial review The TAFRC, a statutory body headed by a retired High Court Judge, consists of domain experts from various fields including two from the finance sector, one of which is from the Government. Rule 3(vii) vests the TAFRC with the power to frame its own procedure in accordance with regulations notified by the Government in that regard and pursuant to which the guidelines for fee fixation have been framed by it. The recommendations of the TAFRC being the resultant of a quasi-judicial decision making process, it will undoubtedly be amenable to the jurisdiction of the court for scrutiny by judicial review, so as to ensure 8 (2019) 7 SCC 172 23 adherence to the constitutional principles of reasonableness, fairness and adherence to the law under Article 14 of the Constitution.
16. Judicial review, as is well known, lies against the decision making process and not the merits of the decision itself. If the decision making process is flawed inter alia by violation of the basic principles of natural justice, is ultra-vires the powers of the decision maker, takes into consideration irrelevant materials or excludes relevant materials, admits materials behind the back of the person to be affected or is such that no reasonable person would have taken such a decision in the circumstances, the court may step in to correct the error by setting aside such decision and requiring the decision maker to take a fresh decision in accordance with the law. The court, in the garb of judicial review, cannot usurp the jurisdiction of the decision maker and make the decision itself. Neither can it act as an appellate authority of the TFARC
18. It needs no emphasis that complex executive decisions in economic matters are necessarily empiric and based on experimentation. Its validity cannot be tested on any rigid principles or the application of any straitjacket formula. The court while adjudging the validity of an executive decision in economic matters must grant a certain measure of freedom or play in the joints to the executive. Not mere errors, but only palpably arbitrary decisions alone can be interfered with in judicial review. The recommendation made by a statutory body consisting of domain experts not being to the satisfaction of the State Government is an entirely different matter with which we were not concerned in the present discussion. The court should therefore be loath to interfere with such recommendation of an expert body, and accepted by the government, unless it suffers from the vice of arbitrariness, irrationality, perversity or violates any provisions of the law under which it is constituted. The court cannot sit as an appellate authority, entering the arena of disputed facts and figures to opine with regard to manner in which the TAFRC ought to have proceeded without any finding of any violation of rules or procedure. If a statutory body has 24 not exercised jurisdiction properly the only option is to remand the matter for fresh consideration and not to usury the powers of the authority".
In CONSORTIUM OF ENGINE GOVERNMENT OF ANDHRA PRADESH, it has been observed thus:
" 141. The Capitation Fee Act is a State legislation that precedes the Unnikrishnan judgment by a decade and fell for consideration therein. The "free seats" and "payment seats" matrix propounded in Unnikrishnan with a cross-subsidization formula thrown in was however not the product of the textual authority of any provision of the Capitation Fee Act. The classification of seats and the cross- subsidization methodology was a curial evolved formula integrated in the scheme evolved in Unnikrishnan.
142. Section 7 enables the Government by notification to regulate the tuition fee or any other fee that may be levied and collected by an educational institution in respect of each class of students, and enjoins that no educational institution shall collect a fee in excess of the fee notified under sub-section-1 thereof. As the Unni Krishnan scheme was invalidated in TMA Pai Foundation which also declared the con tours of operational administrative autonomy of private unaided educational institutions but preserved authority of the State or its instrument, the AFRC to regulate a fee structure proposed by a private unaided educational institution only to ensure exclusion of profiteering and capitation, the powers consecrated to the State under Section 7 must be interpreted consistent with the redefined architecture of the State's regulatory power, post Unnikrishnan and in the legal environment consequent on TMA Pai Foundation, Islamic Academy of Education and PA Inamdar.
143. On a grammatical construction of Rule 4 (of the AFRC Rules) particularly, sub-rules (Hi), (iv)(g) && (v), it is possible to infer that under the provisions of Section 7 of the Capitation Fee Act read 25 with provisions of this Rule, the AFRC is empowered to fix or determine the fee itself. On a true and fair construction of the pluri-signative phraseology of Rule 4 and interpreted to confirm to the law declared in TMA Pai Foundation, Islamic Academy of Education and PA Inamdar however, the provisions of Section 7 and the prescriptions of Rule - 4 must be read down. PA Inamdar inter alia set out to clarify whether regulation of fee structure could be taken over by the Committees ordered to be constituted by the judgment in Islamic Academy of Education Held: ....every institution is free to devise its own fee structure which may however be regulated to prevent profiteering, no capitation fee may be charged a committeefor determining fee structure qua the judgment in Islamic Academy of Education is permissible as a regulatory measure aimed at protecting the interests of the students community as a whole and in maintaining the required standards of professional education on non-exploitative terms in the Institution.
144.This judgment also dealt with the criticism as to the ham-handed, insensitive and stereo-typical ap-proach by Committees while dealing with oversight of fee regulation. The observations on this aspect are found in paras 49 & 150 of PA Inamdar (extracted herein above)
145. In the light of the principles evolving from TMA Pai Foundation to PA Inamdar and to sustain the pro-visions of Section - 7 and Rule-4, we consider it appropriate to read down these provisions (1) As enabling the AFRC to consider institution-specific fee proposals, course-wise on the bases of the parameters indicated in clauses (a) to € and (g) of sub-rule- (iv) of Rule-4
(ii) to analyze fee proposals to verify whether they incorporate or camouflage any profiteering or capitation fee and
(iii) to approve, modify or alter the fee structure proposed by each institution, only for the purpose of excising pro tanto any element of 26 profiteering/capitation fee. If fee proposals of an institution, duly substan-tiated by relevant data, audited accounts and balance-sheets, do not incorporate elements of profiteering or capitation fee (on analyses of the proposals within the contours of the guidelines in Rule-
4), the AFRC must accept the same The AFRC cannot transgress the law declared in TMA Pai Foundation, Islamic Academy of Education and PA Inamdar (that every institution enjoys the operational autonomy to devise its own fee structure) by resorting to a misconceived mission, of formulating a common fee structure for private unaided educational institutions (1) Section-7 of the Capitation Fee Act (insofar as Regulations issued thereunder pertain to private unaided educational institutions whether minority or non-minority), enables issue of Regulation of fee structure pro- posed by an educational institution, only insofar as modification or alteration of the proposed fee structure is to ensure that the institution does not indulge in profiteering or collection of capitation fee Section -7 does not enable the State itself to fix and notify a fee structure that would impermissibly trench upon the operational autonomy of self-
financing educational institutions
(ii) Section 7 enacts a power coupled with a corresponding obligation on the State. Therefore, appropriate Regulations must be issued and executed to ensure oversight and excision of profiteering or collection of capitation fee by every private unaided educational institution. Consequently, neither the State nor its instrumentality -the AFRC, may recommend or notify a fee structure or permit collection of fee by any unaided private educational institution that does not submit its fee proposals together with the relevant data (of income and expenditure, developmental needs and audited books of accounts, for verification and scrutiny
(iii) Since cross-subsidy of the fee payable by one class of students by the other is unconstitutional and thus impermissible, the 27 AFRC while calling for applications for recommending the fee structure and the State Government while notifying the fee structure shall not call for or notify differential fee structure for different classes of seats, whether called 'A' or 'B' categories or otherwise, which does not represent the per capita cost and therefore incorporates elements of cross-subsidy (iv) The fee chargeable from every student admitted to a specific course of study in a specific discipline in each private unaided educational institution shall reflect the per capita cost of such education, on the parameters enumerated in rule (iv), clauses (a) to € & (g) of the rules issued in G.O.Ms.No.6, Higher Education Department, dated 08-01-2007 (The AFRC Rules) The AFRC may recommend and the State Government notify a higher fee for students admitted to 15% of the sanctioned intake in each course of study in each private unaided educational institution (presently categorized as NRI/NRI sponsored) so however that the higher (over and above the fee fixed for generality of seats whether called 'A' category or 'B' category) fee so collected shall be deposited by the private educational institution in a separate account to be employed for the benefit of students from economically weaker sections of society, whom, on well-defined criteria, the educational institution may admit on subsidized payment of their fee. To regulate proper utilization and audit of the amount in this separate account, the State shall issue specific regulation and till such regulation is issued, the AFRC may formulate guidelines for identifying the class or category of students in whose favour the fee subsidy or waiver may be made, duly specifying the criteria for identifying such student or class of students and the manner in which the funds from this special account shall be deployed (v)
(vi) The AFRC while issuing a notification calling for fee proposals shall clearly specify that such proposals should incorporate a uniform fee for all category of students, whether admitted to 'A' or 'B' categories and that the proposals may indicate the higher fee proposed to be charged from NRI/NRIsponsored candidates (and to the limit of 15% of 28 the sanctioned intake) for each course of study in each private unaided educational institution (vii) Clause (f) of Rule (iv) of the AFRC rules impairs the operational autonomy available to private unaided educational institutions, as delineated in the judgments of the Supreme Court in TMA Pai Foundation, Islamic Academy of Education and PA Inamdar, and is declared invalid
(viii) The AFRC shall specify in the notification to be issued (calling for fee proposals from private unaided educational institutions) that an institution which is unresponsive or does not submit statements of income and expenditure, audited balance sheets, and requirements for developmental needs for the immediately preceding year particulars of expenditure incurred on salaries and infrastructure and other particulars as may be specified (with supporting bills, vouchers or receipts, etc.), shall not be permitted to collect any fee. While notifying a fee structure, exercising power under Section 7of the Capitation Fee Act. The State shall record a similar stipulation
(ix) The AFRC is required to recommend and the State Government notify institution-specific fee structure and for the generic variety of institutions offering different courses of study. Therefore, the AFRC shall issue notification(s) calling for fee proposals well-in-advance of commencement of the academic year (whether for fixing block fee structure, applicable for three academic years or revising fee structure already notified for any particular academic year), by the first week of December preceding the relevant academic year for which the fee structure notification or revision is to be issued by the State Government
(x) Where the AFRC considers it appropriate to outsource the administrative function of vetting or verification of fee proposals received from the several private unaided educational institutions (whether to a chartered accountant firm or otherwise), the details of the functions entrusted by the AFRC to such agency(ies) shall be placed in the public domain and published in English and local language newspapers having sufficient circulation in the State, to enable public information of particulars of such entrustment 29
(xi) The AFRC shall instruct the agency or agencies (to whom it entrusts the function of vetting or verification of fee proposals along with the accompanying records and data) to specifically verify and identify whether there is an element of profiteering or collection of capitation fee and to record observations on this aspect, in respect of each private educational institution which submits fee structure proposals (xii) Copies of the report/recommendations prepared and forwarded by such entrusted agency/agencies to the AFRC (which would be the material considered by the AFRC in formulating its recommendations on institution specific proposals and these would also be the material for the eventual fee structure notifications by the State) shall be furnished to each private unaided educational institution which responds to the AFRC notification (inviting fee proposals) and has duly submitted the relevant data, documents and particulars, requisitioned by the AFRC for submission along with fee proposals
(xiii) The reports/recommendations prepared by the entrusted agency/agencies and the recommendations by the AFRC submitted to the State Government shall simultaneously be placed in the public domain
(xiv) The State Government shall issue the fee structure notifications by the 1 week of March, preceding the academic year or block of academic years, as the case may be, for which the fee structure notifications are intended to apply
(xv) As a consequence of the above analyses, declarations and directions, the fee structure Notifications is-sued in G.O.Ms. No.76, Higher Education Department, dated 13-08-2010 G.O.Ms. No.77, Higher Education Department, dated 13-08-2010 G.O. Ms.No.85, Higher Education Department, dated 02-08-2011 and G.O.Ms.No.86, Higher Education Department, dated 04-08-2011 together with the recommendations of the AFRC contained in Order No.13/AFRC/FF/2010- 11.41, dated 06-08-2010 and Order No. 14/AFRC/FF/2010- 11/552, dated 07-08-2010, are declared invalid and quashed 30 (xvi) For the academic years 2010-11, 2011-12 & 2012-13, the AFRC shall now consider afresh the fee structure proposals submitted by those private educational institutions which have responded (to its notification dated 27-04-2010) and forwarded fee structure proposals together with the particulars spelt out by the AFRC in the annexure to the said notification (either wholly or substantially) and shall verify the same for identifying whether the proposals incorporate elements of profiteering or capitation fee (institution and course wise). If any further particulars, documents, registers or data are required, the AFRC may issue a written notice to the concerned educational institution to furnish the specified particulars, documents, registers or data required by it. After scrutiny and verification of the material available, the AFRC shall draw up a report containing its recommendations on the fee structure for each course of study in respect of each responsive institution duly incorporating in its report the seat-wise cost in respect of each course of study in specific institutions recommending a uniform fee for 'A' & 'B' category students. The AFRC may however recommend a higher fee for 15% of the sanctioned intake earmarked for NRI/NRI category students. This exercise shall be in accordance with the observations and directions in this judgment.
(xvii) The State shall notify fee structure proposals afresh for the academic years 2010-11, 2011-12 & 2012-13 after due consideration of the recommendations of the AFRC and in the light of the principles and directions contained in this judgment and (xviii) The relevant exercise by the AFRC and the State, as directed in sub- paras (xvi) and (xvii), shall be expeditiously processed and concluded, including by the issuance of appropriate notifications by the State, in any case within a period of three (3) months from today The several writ petitions are allowed as above, but in the circumstances without costs".
13. Coming to merits of the matter, to determine fee structure in educational institutions offering professional 31 courses, it is necessary to look into the relevant statutory provisions. Section 7 of the Telangana Educational Institutions (Regulation of Admissions and Prohibition of Capitation Fee) Act, 1983 (for short, 'the Act') relates to regulation of fees. Under sub-section (1) thereof, it shall be competent for the Government, by notification, to regulate tuition fee or any other fee that may be levied and collected by any educational institution in respect of each class of students. Section 7(2) stipulates that no educational institution shall collect any fees, in excess of the fee notified under sub-section (1), Section 7(3) requires every educational institution to issue an official receipt for the fee collected by it. Further Section 7 confers power, coupled with obligation, on the State to issue and execute appropriate Regulations to ensure every private unaided educational institution is not profiteering or collection of capitation Fee (Consortium of Engineering Colleges Managements Association (CECMA) Section 7, (in so far as Regulations issued thereunder pertain to private unaided educational institutions-whether minority or non- minority), enables issue of Regulations, (in relation to the fee structure proposed by an educational institution and in so far as 32 modification or alteration of the proposed fee structure is concerned), in order to ensure that the institution does not indulge in profiteering or collection of capitation fee. Further, Section 15 of the 1983 Act relates to the power to make rules and, under sub-section (1) thereof, the Government may, by notification, make rules for carrying out all or any of the purposes of the 1983 Act. In exercise of the powers conferred by Section 15 read with Sections 3 and 7 of the 1983 Act, the Telangana Admission and Fee Regulatory Committees (for professional courses offered in private Un-Aided Professional Institutions) Rules, 2006 (hereinafter called as 'the 2006 Rules) were made and notified in G.O. Ms. No. 6, dated 08.01.2007 Rule 1(ii) of the 2006 Rules stipulates that these Rules shall apply to all private un-aided professional institutions offering professional courses in the State. Rule 2(b) defines 'Admission and Fee Regulatory Committee' (AFRC) to mean the committee constituted by the Government for regulating admissions and for fixation of fees to be charged from candidates seeking admission into private un-aided minority and non-minority professional institutions. Rule 2(h) defines 'fees' to mean all fees including tuition fee and development charges. Rule 2(2) 33 stipulates that words and expressions used, but not defined in these Rules, shall have the same meaning assigned to them in the 1983 Act Rule 4 relates to fee fixation and prescribes a detailed procedure for AFRC to call for information and to fix the fees. While freedom is given to AFRC to determine the fee structure, Rule 4(ii) requires AFRC to decide whether fees proposed by the institution is justified and does not amount to profiteering or charging capitation fee. Rule 4(iv) requires the TAFRC to take into consideration the following factors for prescribing the fees ie (a) location of the professional institution;
(b) nature of the professional course; (c) cost of available infrastructure; (d) expenditure on administration and maintenance; € a reasonable surplus required for growth and development of the professional institution; (f) the revenue foregone on account of waiver of fee, if any, in respect of students belonging to schedule castes, schedule tribes and whenever applicable to the socially and educationally-backward classes and other economically-weaker sections of society, to such extent as shall be notified by the Government from time to time; and (g) any other relevant factor. Under the Proviso to Rule 4(iv), no such fees, as may be fixed by TAFRC, shall amount to 34 profiteering or commercialization of education. It is evident from Rule 4(iv) of the 2006 Rules that a reasonable surplus, for the growth and development of professional institution, is also required to be taken into consideration, by the TAFRC, in prescribing the fees structure. Rule 4(vi) stipulates that fees or scale of fees determined by AFRC shall be valid for a period of three years.
14. It is not in dispute that TAFRC had called for the expenditure data from each institution and evaluated the same with the help of charted accountants and other relevant experts; petitioners have not made any allegation as to the procedure and process of evaluation adopted by AFRC in determining the Fee structure. The entire allegation of petitioners is that fee fixed through impugned GO is exorbitant in comparison to G.O.Ms.No. 29, dated 02-05-2016, as such, it is clear that petitioners have not made any allegation as to the procedure adopted and process of evaluation of fee structure by AFRC. However, in the light of the law laid down by the Hon'ble Supreme Court in Vasavi Engineering College's case (supra), this Court can interfere only when there is a flaw in decision- making process inter alia by violation of basic principles of 35 natural justice, but not the merits of the decision itself. The Hon'ble Apex Court clearly laid down the law in para 16 of the said judgement that if the decision-maker takes into consideration irrelevant material or excludes relevant material or admits material behind the back of the person to be affected or no reasonable person would have taken such decision in the circumstances, the Court may step into the error by setting aside the order. The Hon'ble Apex Court further stated that the Courts, in the garb of judicial review, cannot reserve the jurisdiction of the decision-maker and make decision itself. In other words, this Court cannot examine the reasonableness of the quantum of fee fixed by the expert body having quasi- judicial powers. In this regard, the observations made by the Hon'ble Apex Court in para 19 of the said judgement is relevant.
" 19. It needs no emphasis that complex executive decisions in economic matters are necessarily empiric and based on experimentation. Its validity cannot be tested on any rigid principles or the application of any straitjacket formula. The court while adjudging the validity of an executive decision in economic matters must grant a certain measure of freedom or play in the joints to the executive. Not mere errors, but only palpably arbitrary decisions alone can be interfered with in judicial review. The recommendation made by a statutory body consisting of domain experts not being to the satisfaction of the State Government is an entirely different matter with which we 36 were not concerned in the present discussion. The court should therefore be loath to interfere with such recommendation of an expert body, and accepted by the government, unless it suffers from the vice of arbitrariness, irrationality, perversity or violates any provisions of the law under which it is constituted. The court cannot sit as an appellate authority, entering the arena of disputed facts and figures to opine with regard to manner in which the TAFRC ought to have proceeded without any finding of any violation of rules or procedure If a statutory body has not exercised jurisdiction properly the only option is to remand the matter for fresh consideration and not to usurp the powers of the authority".
It is to be noted that this Court does not, ordinarily, interfere with the recommendations made by the 3rd respondent which were given by a retired High Court Judge and domain experts, unless there is arbitrariness, perversity and violation of provisions of law under which it is constituted and this Court cannot sit as appellate authority. It is to be further noted that the only stipulation under law, as settled, is that institutions shall not charge capitation fee or resort to profiteering while fixing fees and that the 3rd respondent's job is to ensure that it does not happen. Though petitioners averred that Respondents institutions are profiteering, they have chosen to file neither a pleading nor any material demonstrating profiteering or charging of capitation fees, when the burden of proving it lies 37 entirely on them. In the instant case, except repeatedly averring that fee fixed in the impugned GO is arbitrary, nothing has been pleaded or placed on record to demonstrate how it is arbitrary. Insofar as the comparison carried out with G.O.Ms. No. 29, dated 02.05.2016 to the impugned G.O. is concerned, the same is devoid of any merits. The fee structure for the previous block period has no bearing on the current determination. It is argued by respondents that fee fixed under G.O.Ms. No. 29, dated 02.05.2016, was itself flawed and illegal, as it did not adhere to the parameters prescribed by the Hon'ble Supreme Court and Rule 4(iv) of the TAFRC Rules. Admittedly, the 1st respondent is bound by the recommendations of the 3rd respondent under Rule 4(v) of the TAFRC Rules and judicial pronouncements. It has no Independent authority to alter the recommendations. Further, paying stipends to postgraduate students is mandated by law; G.O.Ms. No. 98, dated 01.09.2018 fixes the stipend between Rs. 44,075/ and Rs. 48,973/- per month for postgraduate students. In this regard, petitioners' argument that stipends compensate for services rendered by students is dismissed as specious as the services form part of their education and training, mandatory for awarding degrees and 38 professional preparation. Moreover, stipend often exceeds the fee collected from Convener Quota students in clinical non- degree courses and amounts to 80-100% of fees in degree courses.
15. In view of the above discussion and in the light of legal position more particularly with reference to the principles laid down by the Hon'ble Supreme Court as to the powers of the Courts to judicial review of administrative actions and decisions of the Tribunals, this Court is refraining from interfering with the impugned GO. It is also to be seen that the allegation of petitioners that fee fixed through the impugned GO is exorbitant in comparison to G.O.Ms.No. 29, dated 02-05-2016 and it was increased from 118.75 to 142% in case of competitive authority quota seats and from 296.5 to 313.8% in case of management quota seats of clinical courses. As per G.O.Ms.No. 29, fee for competitive authority quota seats was Rs. 3,20,000/-; even as per petitioners, 5 to 10% hike would be reasonable; if it is calculated with 10% hike per annum, fee in 2023 would be Rs. 6,24,000/- approximately. It is more or less equal to the fee fixed for competitive authority quota seats through impugned GO. And there is no increase of 118% to 140%, as stated by 39 petitioners. Hence, even on bare perusal of facts, there is no merit in the allegation of petitioners All the Writ Petitions are therefore, liable to be dismissed.
16. The Writ Petitions are accordingly, dismissed. No costs.
17. Consequently, miscellaneous Applications, if any shall stand closed.
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NAGESH BHЕЕМАРАКА, J 27th December 2024 Ksld